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UPDATE 1-KGHM says plans for large output rise unrealistic

Published 08/17/2009, 07:57 AM
Updated 08/17/2009, 08:00 AM
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* Says output rise to 700,000T in 2010 unrealistic

* To present changes to 2009 guidance after Q3

* Eyes stake in mining project in 2009, likely in the U.S. (Adds more quotes, details)

WARSAW, Aug 17 (Reuters) - Europe's No.2 copper producer KGHM dropped plans to boost production by some 40 percent next year because it no longer planned to make a large acquisition of foreign deposits, its chief executive said.

Poland's state-controlled miner also said it would announce any changes to its 2009 guidance after the current quarter despite nearing its current earnings target after the second quarter.

KGHM, which expects to produce more than 500,000 tonnes of copper this year, previously planned to boost the figure next year by expanding abroad.

"The target of raising production to 700,000 tonnes annually in 2010 is unrealistic," CEO Herbert Wirth told a news conference on Monday.

Wirth had previously said that KGHM would be unable to follow through with its ambitious plans after yielding to the state treasury to pay a 2.34 billion zlotys ($790 million) dividend in June.

But KGHM still expects to make at least one acquisition of a stake in a mining project this year, most likely in the United States. It is also discussing potential purchases in Peru and Laos, Wirth said, but did not elaborate.

"We are running due diligence in two projects in the U.S., one in Peru and are negotiating a purchase of a concession in Laos," KGHM CEO told reporters. "This year we seek a stake of a few tens of percent in one project, most probably in the U.S."

He added that KGHM was not determined to sell its 25 percent stake in Poland's top mobile operator Polkomtel, backtracking on earlier comments.

Poland's largest refiner PKN Orlen wants to unload its holding this year, with Vodafone, which also has a 25 percent stake, seen as the most likely buyer.

KGHM shares fell 3.2 percent by 1147 GMT, in line with the wider market. ($1=2.962 Zloty) (Reporting by Adrian Krajewski and Agnieszka Barteczko, writing by Chris Borowski; Editing by Jon Loades-Carter)

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